Lessons Learned from Tough Times

Dave Heinen focuses on customer service to grow his Kansas City company.

It’s a good thing to learn from your experiences. It’s much better (and usually less painful) to learn from other people’s experiences.

Having worked through two economic recessions in his career and seeing the wreckage it caused to other small businesses, it’s hardly surprising Dave Heinen, 56, carefully controls the growth of the Kansas City, Kansas-based company that bears his name. Heinen, founder and owner of Heinen Landscape & Irrigation, is content to grow his company modestly—10 percent or a bit more—this coming year; even after two consecutive good years.

“If we try to do more, we begin to lose quality control,” Heinen says. “We will not add any additional services, but instead focus on improving the execution of the services we already provide.”

The key to expanding the size of his company, he says, depends on his success in attracting additional reliable, career-oriented workers.

It’s a tall order given today’s tightening employee pool. As of this writing in early December 2015, the Kansas City metropolitan unemployment rate stood at 5.4 percent compared to the U.S. rate of 5.7 percent. But there’s another bigger challenge to overcome than the slowly falling unemployment rate, he says.

Dave Heinen

Job prospects need opportunity

“The employee pool has changed. The Hispanic work force has shrunk, and there are fewer people selecting to go into this industry,” says Heinen. “Young people view other professional industries more favorably. We have to do a better job of showing them the opportunities in this industry. We have to show them they can have a future in this industry, where they can earn enough to buy a home and raise a family,” he continues.

Heinen is constantly looking to add new key employees to his team. “It doesn’t matter even if it’s January with snow on the ground. If the person is the right fit and has a passion for the industry, I’ll put them on, and then we’ll grow to that capacity,” he says. “We have a training program to build up their technical skills.”

This methodical step-by-step business-building approach is influenced, in large part, by past experience, mainly the two unexpected economic shocks he experienced since entering the industry in 1983.

During his student days at the University of Tulsa in the late 1970s he worked summers for an established construction company. The company grew rapidly and Heinen began working full-time. But when Saudi Arabia and its allies unexpectedly ramped up oil production in 1985 creating a severe over-supply, the Tulsa economy tanked. The price of crude dropped 67 percent from November 1985 to March 1986. By the end of 1986, crude was selling for $9.85 per barrel, even lower than it had been in 1973 prior to the OPEC oil embargo. Domestic producers in Texas and Oklahoma could not afford to drill or pump at that price.

“When the oil industry shut down, most of the construction in Oklahoma shut down,” recalls Heinen. “Construction was being driven by oil money.” Almost all contractors suffered because of the contraction, he remembers.

A fresh start

Seeking opportunity elsewhere in the Midwest to remain near his family, Heinen moved to Kansas City with its more diversified economy.

“I was a little hesitant to get back into the industry, but I knew if I did, I wanted to pursue projects that I considered to be interesting and challenging, projects not based so much on volume,” he says. So that’s what he did.

Initially, the company he founded in Kansas City focused mostly on construction, offering hardscapes, landscape installations and sprinklers. He added landscape maintenance several years prior to the 2009 recession. That turned out to be a good move considering the damage the recession inflicted on the industry, and the sputtering, feeble recovery that followed. While construction projects shrunk with the housing crash, maintenance continued to generate cash flow.

“We just kind of hunkered down and waited for everything to settle down,” recalls Heinen. Unlike many other small businesses in his market, especially landscape companies carrying a lot of debt, he and his company managed to weather the tough times.

“The thing that dried up the most initially was commercial work, and a lot of guys in the business then went into residential work,” recalls Heinen. “Also, prices dropped all the way around.”

Unfortunately, the trend of falling prices for services, such as lawn applications and property maintenance, underway for years but exacerbated by the recession, continues to haunt the industry. Heinen says “the race to the bottom” in terms of landscape services pricing is hurting everybody in the green industry.

“When we look at things like mowing cost per acre compared to 10 or 15 years ago, we’re getting substantially less,” says Heinen. “The same goes for residential sprinkler systems. Yet during the same time, the cost of materials and wages has gone up substantially.”

The Perfect Opportunity to Give Back

Few endeavors take more planning or are more costly but also more rewarding than undertaking and completing a significant and successful community service project.

On Sept. 2, 2015, the Heinen landscaping team beautified the landscape at KVC Health Systems and its sister venue, the Ball Conference Center. Non-profit KVC, in Olathe, Kansas, is a national leader in adoption and child welfare education.

“Adoption and finding lifetime homes for children is an important cause,” says company owner Dave Heinen. “KVC does a great job uniting kids and families. Our people really wanted to help a great cause in our community. KVC was a perfect fit.” Since Heinen is the parent of an adopted child himself, this opportunity was one of a kind. “We provided kinship care and not every child has that option,” he continues. “KVC provides an important service when no family can step up to help.”

Heinen credits local vendors, including House of Rocks and KAT Nurseries, for their support and donations, which included trees, shrubs, flowers and granite pathways. Ewing Irrigation Supply treated Heinen and his 25 employees with a lunch cookout.

At the end of the day, the KVC staff came outside to admire the newly landscaped grounds and offer up a big round of applause to the Heinen team.

Heinen says he was extremely proud of his employees’ enthusiasm for the “extreme makeover,” and he feels being able to work together all at once brought them together as a team.

Industry prices must rise

This can’t continue indefinitely, says Heinen, and he predicts it won’t. As the economy improves and the cost of doing business continues to climb, he feels the pricing tide will have to start moving in a direction more favorable to professional service providers.

“Things have been cut down to the bone pretty well, and now with the labor market tightening, the window for consumers getting a very inexpensive price is going to go away,” he predicts. This can happen sooner rather than later if the largest, most recognizable companies take the lead, he suggests.

“The larger operations set the tone for the industry. I think now is a good opportunity for them to take more of a leadership role. Ultimately, what the consumer would be getting from the industry would be a better, more consistent product,” says Heinen.

Heinen Landscape & Irrigation remains competitive even in this fast-paced, low-cost landscape services environment by “operating more efficiently and with better-trained people” than its larger competitors, says Heinen, who avoids going head-to-head with them on the big HOAs, apartment complexes and large corporate parks that attract so much competitive pricing pressure.

“We gear ourselves more toward owner-occupied properties where they’re more interested in their long-term investment and improvements to their properties rather than the lowest price,” says Heinen. “Also, we focus on local higher-end residences.”

Dave Heinen brought his 25-person landscape team together this past fall to beautify the grounds at KVC Health Systems and its allied Ball Conference Center in Olathe, Kansas.

Full range of services

The 25 employees of Heinen Landscape & Irrigation Services provide a full range of landscape services – just about any outdoor service a property could ever need or want. The list includes initial design and construction, property maintenance, lawn care, irrigation, drainage, decks and patios, water features, landscape and holiday lighting, even gutter cleaning.

While Heinen will send his construction crews to do work into nearby cities, such as Leavenworth, Lawrence, Liberty and Louisburg, he clusters most of his maintenance and lawn care accounts within the Kansas City metro area.

Heinen points to the quality of his employees as one of his company’s biggest strengths. “We have employees who have been with us for 10 to 15 years,” he says. “I feel it’s a better use of my time to take care of our associates and treat them better than my competitors. Constantly replacing them and continually training, dealing with loss exposures and other issues is unproductive.”

His company offers employees benefits such as a retirement plan, medical insurance, vacation, and it pays overtime. “I want everybody who works here to be treated the same way I’m getting treated.”

Like the owners of all small family-owned service businesses, Heinen wears many hats during the course of a work week. Much of his time he spends building relationships with customers and interacting with his staff, which he enjoys. Part of each week he devotes to administration, which he doesn’t enjoy as much.

“That portion of the business seems to be requiring more and more of my time to make sure it stays on track and stays in compliance,” says Heinen. “The frustrating aspects include the paperwork involved with insurance, audits, taxes, DOT compliance—all of the administrative parts of the job. I would like to hand it off to an outside source, but we’re not quite to the size where we can afford to do that.”

What will the future hold for Heinen and his company? His answer is to keep going and keep growing.

Dave Heinen said he was extremely proud of his employees’ enthusiasm for working on a community service project because of what they did for the organization and also because it brought his employees together as a team.

“I really don’t see retiring at this point because I genuinely like this industry,” he says. His short term goal is to take his company’s customer service to an even higher level and to grow by at least another 5 to 10 percent in 2016.